EMERGING MARKETS-S.African rand firms ahead of cenbank move; stocks slide

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South Africa cenbank decision due 1300 GMT

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Turkey cenbank decision due 1100 GMT

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Brazil holds interest rates after 12 straight hikes

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Indonesia raises rates for 2nd straight month

By Anisha Sircar and Amruta Khandekar

Sept 22 (Reuters) - South Africa's rand inched higher on Thursday ahead of a large rate hike expected from the country's central bank, while emerging market stocks hit near 28-month lows after an aggressive view for U.S. rates from the Federal Reserve.

The rand gained 0.4% to trade at 17.6 to the dollar, with investors eyeing a likely 75 basis points hike by the South African central bank in a bid to help bring inflation back within its 3%-6% target range.

Data on Wednesday showed August inflation eased to 7.6% year on year from 7.8% in July, still well above the target, although it suggested that inflation may have passed its peak.

Meanwhile, the Fed on Wednesday lifted its policy rate by 75 basis points for the third time and projected raising rates further and faster than investors had expected.

"The message was more hawkish than expected, so the market is taking in the information and you may see volatile sessions till end of the week," said Cristian Maggio, head of portfolio and ESG strategy at TD Securities.

The dollar surged to a fresh two-decade high and Asian stocks hit a two-year low, while EM stocks fell 1% to their lowest since May 2020.

Shares are now down more than 25% so far this year and eye their worst year since the 2008 financial crisis, as markets digest a deteriorating global growth outlook due to surging inflation, aggressive tightening cycles and geopolitical risks.

Turkey's central bank's decision is also due later in the session, with analysts expecting the bank to hold rates at 13% after surprising with a rate cut last month.

"If you exclude Turkey, the direction of travel is for higher rates... In Turkey, there is a risk of cuts, which will be a nonsensical decision. It would be even more difficult to understand a decision of that kind today, given inflation has moved beyond the 80% mark," Maggio added.

The lira slipped 0.2%.

Brazil's central bank on Wednesday held rates unchanged after 12 consecutive hikes, as expected, while the Philippine central bank raised rates by half a percentage point, also in line with expectations.

Indonesia hiked rates by a surprise 50 basis points, in a bid to control inflation after the government raised fuel prices earlier this month.

The rupiah shed 0.2%, while Philippine's peso fell 0.8%. Other countries' central banks expected to announce decisions on Thursday include Taiwan, Egypt and Paraguay. For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX

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(Reporting by Anisha Sircar in Bengaluru; editing by Uttaresh.V)